CGST Busts Illegal Pan Masala Unit in Dommara Pochampally, Rs 160 Cr Evasion Detected

Hyderabad CGST zone officials have busted an illegal pan masala and tobacco manufacturing facility operating from a tin shed premises in Dommara Pochampally in Medchal Malkajgiri district, detecting suspected GST, cess, and central excise duty evasion estimated at Rs 160 crore.

A key accused, identified as Syed Azeemuddin of Hyderabad, was arrested on August 21 for allegedly organising and managing the production and dispatch of the illicit goods. He was produced before the special economic offences court in Hyderabad, which remanded him to 14 days of judicial custody.

The operation was launched on August 20 following specific intelligence. When CGST officials raided the unregistered premises on the outskirts of Hyderabad, they discovered 40 undeclared form-fill-seal (FFS) machines actively running to pack pan masala and tobacco or jarda products. Fifty-six workers were present at the facility during the search.

According to officials, the unit was illegally producing and packing several branded and unbranded varieties of scented jarda and pan masala linked to a Goa-based brand without statutory registration.

During the search, authorities seized approximately 5,500 kg of finished pouches and ready-to-dispatch consignments with an estimated value of Rs 76 lakh. Enforcement teams also confiscated 2,015 kg of pan masala mixture, 810 kg of raw tobacco, packaging materials, two transport vehicles, and the 40 operating FFS machines, along with operational records.

Investigators determined that finished consignments were being cleared without the payment of applicable Goods and Services Tax, central excise duty, and the mandatory health security and national security cess. The estimated Rs 160 crore duty evasion was calculated based on the physical stock, manpower, operating machinery, and statements recorded during the raid.

The crackdown follows the introduction of a capacity-based taxation and cess framework for the tobacco and pan masala industry, which took effect on February 1. Under the Health Security and National Security Cess Act, 2025, a monthly levy is charged on pan masala based on the number, type, and operating capacity of installed packing machines. A similar capacity-linked excise duty applies to chewing tobacco, gutka, and jarda under the Central Excise Act.

CGST officials noted that undeclared packing machines were being used specifically to bypass these capacity-linked duties, adding that intelligence-based enforcement and data analytics are being intensified across the sector to curb illegal manufacturing.